Picking the cable channel you want
Report: FCC is expected to back 'a la carte' pricing in the industry, instead of bundled channels.
November 29, 2005: 5:59 AM EST

NEW YORK (Reuters) - The Federal Communications Commission is expected to suggest that cable companies could best serve their customers by allowing them to subscribe to individual channels instead of packages of several stations, the Wall Street Journal reported Tuesday.

The newspaper said that FCC Chairman Kevin Martin is expected to announce Tuesday that the commission will soon revise the conclusion it reached in the report it issued last year on "a la carte" pricing in the cable industry.

Citing an FCC official familiar with the revised report, the Journal said the report will conclude that buying individual channels could be cheaper for consumers than bundles and that themed tiers of channels could be economically feasible.

Last year's FCC report on the subject found that most U.S. households would face higher television bills if they only paid for the channels they wanted to watch.

The commission said then that increased costs for marketing and
equipment would force up monthly bills by 14 percent to 30 percent for most cable or satellite TV customers even if they only paid for a handful of stations.

Customer advocates have said a pay-per-channel approach would keep cost increases in check by making programmers and providers more accountable to viewers.

OldRightHander

11-29-2005, 02:29 PM

Two years ago I sent a letter to Time Warner proposing the same thing and I didn't even get a response. If I could just get what I want, I'd probably only have about 20 channels.

REDREAD

11-29-2005, 02:35 PM

The cable industry has a point though. Think of all the possible combinations the customers could pick if they can mix and match 200 channels. That's going to add cost.

Let's face it, if the average customer pays $X for their package, don't you think the customized package is also going to average out to $X? The cable companies aren't going to take a revenue hit.

What's going to happen is that the popular stations will get priced very high, while the less popular stations will get discontinued. (Do you think the cable company will bother to carry the low revenue choices? probably not) I'm not sure that's the best thing for the consumer.

OldRightHander

11-29-2005, 02:45 PM

What's going to happen is that the popular stations will get priced very high, while the less popular stations will get discontinued. (Do you think the cable company will bother to carry the low revenue choices? probably not) I'm not sure that's the best thing for the consumer.

I never thought about that. A lot of the channels I like are quite possibly some of the less popular ones. If you could let me have all the sports channels and all of the History Channels, I would be content.

Yachtzee

11-29-2005, 02:59 PM

I don't think the problem is so much choice of channels, it's choice of providers. If they allowed meaningful competition in local markets, like they do phone service, you might see more flexibility in buying cable channels. I get the feeling if they allow people to buy channels separately without meaningful competition, you'll see people having to pay as much just to get ESPN as some people now pay for their entire basic cable service.

deltachi8

11-29-2005, 03:11 PM

Hmm, so what channels would you pay for that you currently have?

Caveat Emperor

11-29-2005, 03:24 PM

What's going to happen is that the popular stations will get priced very high, while the less popular stations will get discontinued. (Do you think the cable company will bother to carry the low revenue choices? probably not) I'm not sure that's the best thing for the consumer.

Yup.

If the cable company makes an average of $50 (for example) on a subscriber's basic package, under the new "a la carte" system, they'll just rig the numbers to ensure that a list of the most frequently selected channels adds up to the same price, so they don't lose any revenue.

So, yeah...it might seem like a great idea to be able to pay ONLY for (say) ESPN, ESPN2, Comedy Central, TNT, USA, FX, TBS, Spike TV, Cartoon Network and Sci Fi -- but if that turns out to be what everyone does, those channels are just gonna cost a fortune individually.

marcshoe

11-29-2005, 03:25 PM

This sounds like a good idea, but I worry that this will lead to more homogenization. Channels will need to reach a larger audience to stay solvent, and, as has happened with broadcast TV and (especially) radio, everything will start to look the same.

Too often catering to the largest possible segment of society leads to mediocrity.

I think those who have said it wont save any money are probably right, but who knows with the digital addressable boxes, it may be more economically feasible than in the past.

TeamCasey

11-29-2005, 03:39 PM

It would kill public broadcasting.

OldRightHander

11-29-2005, 03:39 PM

I would get all of the ESPN channels, The History Channel, History International, Military Channel, (some nice historical documentary things on there) Discovery, TLC, FSC, Fox News and CNN, and the local channels. My wife would then add HGTV, Lifetime, Discovery Health, and Court TV.

I think those who have said it wont save any money are probably right, but who knows with the digital addressable boxes, it may be more economically feasible than in the past.

You probably won't save much if any on those channels. ESPN, Turner charge premiums for their channels. They also make the cable and satellite companies put it on their basic tier services. If they become ALA Carte, no savings for you, most likely, you'll be paying more.

deltachi8

11-29-2005, 03:53 PM

The things that hurts is the only thing I want ESPN for is the games coverage of NFL, NCAA and MLB. The rest they can keep.

Unassisted

11-29-2005, 04:13 PM

It would kill public broadcasting.Maybe not. PBS is a broadcaster and broadcasters are covered by must-carry regulations. That means as the law is currently written, cable companies can't deliberately exclude their signals from going into subscribers' homes. I haven't heard if this a-la-carte rule would apply to broadcasters, but I am certain the FCC couldn't eliminate must-carry without broadcasters making a huge fuss.

GAC

11-29-2005, 08:16 PM

Two years ago I sent a letter to Time Warner proposing the same thing and I didn't even get a response. If I could just get what I want, I'd probably only have about 20 channels.

And that is why they don't do it. 30 cooking, shopping, and home decorating channels would die! :lol:

RBA

11-29-2005, 08:28 PM

As long as I get the "Girls Gone Wild" info commercials, I'm happy.

LoganBuck

11-29-2005, 09:48 PM

I agree RBA, but Tony Little and John Basedow must die! Along with BowFlex and Alex Trabeck!

Rojo

11-30-2005, 02:07 AM

The cable industry has a point though. Think of all the possible combinations the customers could pick if they can mix and match 200 channels. That's going to add cost.

Let's face it, if the average customer pays $X for their package, don't you think the customized package is also going to average out to $X? The cable companies aren't going to take a revenue hit.

What's going to happen is that the popular stations will get priced very high, while the less popular stations will get discontinued. (Do you think the cable company will bother to carry the low revenue choices? probably not) I'm not sure that's the best thing for the consumer.

What if I'm not the average customer? Sure the folks who can't live without 20 channels are probably going to get charged the same. But what about people who might opt for a few channels affordably or nothing at all? Shouldn't the cable companies look to pick up something from them? Virtually nobody I know has cable anymore because the the price is too high for something you shouldn't be consuming in the first place.

And I don't know if they will discontinue unpopular channels or not. I frankly don't know how much it costs them to keep them as an option. But that argument strikes me as decidedly un-American. Why should the Polka Channel be kept on the air by ESPN's coattails.

RBA

11-30-2005, 09:43 AM

Just warning you all. Since most of us here are sports fans, we'll all end up on the high end of the cable pricing because ESPN and Fox Sports Nets charge premiums for their channels. If you settle for just the ESPN channel and Fox Sports Net, I wouldn't be suprise if your cable bill is the same, if not more.

flyer85

11-30-2005, 10:36 AM

The end result would be that a lot of channels would be going away. This proposal is unlikely to save consumers money, except in rare cases.

Is it a good idea? Hard to say without seeing how it would work in practice.

SandyD

11-30-2005, 11:02 AM

"Mommmy, mommy, pleeeaasse can we get the "lastest craze" channel? Johnny has it."

What if one spouse likes movies, and another likes sports? Could make your bill go way up. Or cause fights over who gets what channels to fit within your budget.

15fan

11-30-2005, 11:19 AM

The technology exists to do pay per view.

So instead of charging a flat monthly fee for unlimited access, what about offering a pay-as-you-go cable consumption plan? Charge me a base amount for unlimited access to the public network affiliates & pbs. If I don't watch any other channels, don't charge me anything else. If I do watch an hour of a basketball game on ESPN or a movie on Turner South, then charge me an hourly rate.

Televangelists on Unusual Side in Indecency Debate
By Jube Shiver Jr.
Times Staff Writer

November 29, 2005

WASHINGTON — Trying to preserve their electronic pulpits, the nation's religious broadcasters find themselves in the unusual position of fighting an effort by anti-indecency groups to thwart channels offering racy programming.

The issue involves a debate over whether cable companies should continue offering subscribers mainstream and niche channels in bundles, or let them buy what they want on an a la carte basis.

Consumer groups are pushing to let people choose their channels rather than pay for ones they don't watch. One Federal Communications Commission study showed people on average regularly watch only 17 of the more than 100 cable channels they typically receive.

But what started largely as a consumer issue has now morphed into a larger controversy involving whether cable operators should be required to continue exposing subscribers to niche channels, including religious ones, that people might not order on their own.

"We don't just want to preach to the choir; we want to reach the unchurched," said Paul Crouch Jr. of Trinity Broadcast Network in Santa Ana. "The bottom line is that we want to be everywhere on cable."

The controversy is expected to come to a head today when media executives, televangelists, government regulators and consumer activists gather for Open Forum on Decency, held by Senate Commerce Committee Chairman Ted Stevens (R-Alaska).

Lawmakers and advocacy groups have seized on the a la carte system as a way to give cable TV subscribers more flexibility to drop channels with adult fare, citing such programs as the plastic surgery drama "Nip/Tuck" on FX that regularly features sex and gore.

"A la carte is a solution that will immediately address the issue of indecency on cable," said Tim Winters, executive director of the Los Angeles-based Parents Television Council.

The debate has created unusual bedfellows: religious broadcasters that want to keep getting their messages out, and free-speech advocates who are fearful that the unbundling of cable channels is being used by anti-indecency advocates as a tool against provocative shows. It also pits televangelists against their usual allies in trying to clean up language and sex on TV and radio.

Christian broadcasters, including such big names as Pat Robertson and Jerry Falwell, worry that changing the current system will cut into viewership. If that puts them on the opposite side of where they usually stand in the indecency debate, Crouch said, "so be it."

But Winters contends that religious broadcasters oppose more cable choice because they "are very fearful of losing any market share."

To preserve viewership, big religious broadcasters such as Trinity, which owns 33 TV stations, and Daystar, operator of stations in San Francisco and 44 other U.S. cities, are pushing the government to expand regulations requiring that cable operators carry local, over-the-air channels such as theirs.

That has put them at odds with other religious programmers that don't own TV stations, such as INSP and Gospel Music Channel. They fear their shows will be crowded out by channels that cable operators have to carry.

"I don't think the answer to indecency is necessarily more religious programming," said Gospel Music President Charles Humbard, son of televangelist pioneer Rex Humbard. "The answer is for people who know better to correct what's going on … by extending broadcasting indecency rules to cable."

Cable TV has emerged as a major indecency battleground. Because programs aren't transmitted into homes over public airwaves, operators are exempt from regulations involving sex and language. They also are shielded from the pressures of the FCC, which exercises clout over broadcasters by regulating station licenses.

Nonetheless, FCC Chairman Kevin J. Martin has urged cable operators to voluntarily rein in racy shows, or risk having Congress do it. Indeed, Sen. Ron Wyden (D-Ore.) is seeking support for a bill that would force the cable industry to offer a "family friendly" tier of programming.

But cable companies and major media companies have been fighting government efforts to regulate programming.

"It's not fair to handicap us with these requirements because we want to be free to give consumers what the marketplace wants," said David Grabert, a spokesman for cable operator Cox Communications Inc.

Time Warner Inc. and Comcast Corp., seeking FCC approval of their $17.6-billion acquisition of ailing cable company Adelphia Communications Corp., are balking at the government's indecency concerns.

The two companies reportedly have convinced the agency that it doesn't have the authority to require them to offer a family-friendly tier of programming as a condition of approving the deal.

The FCC nonetheless will seek public comment next month on a proposal that would require the cable industry to offer a la carte programming.

Preston Padden, executive vice president of government relations for Walt Disney Co., predicts that if such a proposal is enacted, viewers stand to lose.

"Consumers likely would pay more, and get less," Padden said.

*

(BEGIN TEXT OF INFOBOX)

Watching cable

Cable, which has far fewer viewers than network television does, has become a battleground over indecency.

Average number of prime-time viewers for top cable and broadcast networks

(In millions)

TNT: 2.6

USA: 2.3

Disney: 2.1

Nick at Night: 1.9

Fox News: 1.8

ESPN: 1.7

Lifetime: 1.7

CBS: 13.4

ABC: 10.9

NBC: 9.4

NJReds

11-30-2005, 03:01 PM

How about just letting multiple Cable Companies compete in the same area.

People can choose between Sprint, Verizon, MCI for phone service...

We should be able to have the same ability to choose cable service. I never understood why cable's allowed to have a monopoly. At least that's the way it is in NJ.

Caveat Emperor

11-30-2005, 03:33 PM

And I don't know if they will discontinue unpopular channels or not. I frankly don't know how much it costs them to keep them as an option. But that argument strikes me as decidedly un-American. Why should the Polka Channel be kept on the air by ESPN's coattails.

When ESPN first started out, it was the functional equivalent of the Polka Channel. There's a reason why all the stuff they show on "Cheap Seats" looks so bad -- ESPN didn't have the budget or clout to buy any major programming and were relegated to showing things like the World Putt Putt championships or NFL Celebrity Bowling tournaments. The closest thing you got to major sports was the USFL.

Comedy Central was much the same way -- some nights you could sit through entire programming blocks watching nothing but stand up comedy (Stand Up, Stand Up, The A-List, London Underground, etc.). For a while, the only first-run programming they did OTHER than stand up acts was Mystery Science Theater 3000 (an amazing show, to be show). They didn't even hit 50% of cable providers until AFTER South Park debuted back in the late-90s.

If offered to me, as a cable subscriber, with the programming lineups they originally had (and not knowing their future) -- I wouldn't have paid a dime for either channel, and I really don't think I'd be alone.

The pattern is repeated over and over again -- Cartoon Network started off as just a dumping ground for old Hannah Barbera properties in the Turner libarries -- now it's Adult Swim package, featuring original programming like Aqua Teen Hunger Force, Harvey Birdman: Attorney At Law, and The Boondocks is one of the highest rated cable blocks. The Sci-Fi channel was nothing but B-Movies, now their Sci-Fi Friday features some amazing first run shows, like the new Battlestar Galactica, in my opinion the most well-written show on cable television. Wouldn't have paid a dime for the programming on all of these channels when they first came out either. Heck even the Food Network, a premise that probably should never have worked, provided me hours of enjoyment when they brought Iron Chef over from Japan.

That's the kind of stifling of new ideas that would occur, likely, in a system like this. New channels would have difficulty gaining traction and convincing people to subscribe. Channels that otherwise might develop into great programming blocks once they got their foot in the door are now cut off at the waist because they can't attract a large enough subscriber base to initially make any ad revenue. Then, what'll end up happening is either no new cable development (unlikely), or the cable system will just start adding these channels in for free and creating the same system we have today: programming packages where you buy key channels and get a lot of others riding along with them.

This is Congress at it's finest: regulating a problem that doens't exist and over-exercising federal power to try and make it look like they're fighting the good fight, when in reality all they're doing is wasting everyone's time.

Roy Tucker

11-30-2005, 03:34 PM

I have a hard time believing this ala carte menu of cable channels would cost me less money.

Cable companies would figure out the angles and weasel a few more bucks out of me.

And open competition sounds good in theory. But we have "open" competition for electrical power and 99% go with CG+E.

LoganBuck

11-30-2005, 03:51 PM

Totally Agree with Caveat. FX has gone from NASCAR and BMovies, to highly rated especially the block of NipTuck/Rescue Me/Shield. NASCAR will always draw, but you can only have so much. The Food Network is similar it started off with programs like the Fat Ladies. Now much of it is a cross between cooking and a fantastic tour de Americana.

If I could dump the stations that I don't watch all the shopping channels, Lifetime, the religious channels, MTV, and the financial channels would go. Odds are that save MTV, most other people would dump the same channels.

RBA

11-30-2005, 04:00 PM

I'll dump MTV in a heartbeat.

flyer85

11-30-2005, 04:21 PM

It would kill public broadcasting.so what's the downside?:devil:

flyer85

11-30-2005, 04:23 PM

The closest thing you got to major sports was the USFL. ... I thought Australian Rules Football and Squash were pretty big.

Tony Cloninger

11-30-2005, 04:56 PM

Anything that gets rid of the Real World......... the stupid celebrity reality shows or rich people who have nothing better to do than be on reality shows ....i would be in favor of.

Maybe simply allowing people to opt out of channels they don't want and giving them a price break for not taking those channels would be a good thing. I have over 100 channels on my digital cable and there are a vast number of them that I never watch, but the digital tier has some channels that I do watch but aren't on the basic package.

GoReds

12-01-2005, 10:30 AM

Why does it have to be one way or the other? Offer both!

If people want to pay a la carte prices for channels, so be it! If they want package pricing, let them have it. I don't understand why it can only be one way or the other.

However, having said that, I think that a la carte pricing has the potential to affect package pricing. If cable/satellite providers are not generating enough income to meet the requirements of ESPN, HBO, etc., then I can see them raising the package pricing in order to compensate.

Unassisted

12-01-2005, 12:16 PM

Why does it have to be one way or the other? Offer both!It's fairly recent that this has become technically feasible.

With analog cable there were technical limitations that made it impractical to provide a la carte channels. Each channel or block of channels had to be blocked with a technician-installed filter to be prevented from entering a customer's building. Expensive for the company to send that technician and unwieldy to install a bunch of filters.

With digital cable, the company can send a signal down the cable to tell an individual digital converter which channels to provide and not provide.

Rojo

12-01-2005, 04:54 PM

If offered to me, as a cable subscriber, with the programming lineups they originally had (and not knowing their future) -- I wouldn't have paid a dime for either channel, and I really don't think I'd be alone.

That's the kind of stifling of new ideas that would occur, likely, in a system like this. New channels would have difficulty gaining traction and convincing people to subscribe. Channels that otherwise might develop into great programming blocks once they got their foot in the door are now cut off at the waist because they can't attract a large enough subscriber base to initially make any ad revenue. Then, what'll end up happening is either no new cable development (unlikely), or the cable system will just start adding these channels in for free and creating the same system we have today: programming packages where you buy key channels and get a lot of others riding along with them.

This is Congress at it's finest: regulating a problem that doens't exist and over-exercising federal power to try and make it look like they're fighting the good fight, when in reality all they're doing is wasting everyone's time.

But its a problem to me, does that count? I'd like to see the Daily Show but I'm not going to pay $100/month for it. And I know lots of people who feel the same way. (Nobody I know has cable anymore). So millions of potential viewers of the Daily Show are locked out so that crappy channels can be subsidized.

Cable TV as it stands now is a rip-off. The best thing, as mentioned, would be to allow different companies to use the equipment as happened with the phone company. But this at least addresses a problem in the short term.

TRF

12-01-2005, 05:12 PM

Originally Posted by TeamCasey
It would kill public broadcasting.

One of my many jobs is master control operator for a PBS station. If you aren't watching, you are missing out.

But this plan wouldn't kill PBS. in fact, it more than likely would give it more exposure, especially if local channels are exempt from the al a carte pricing.

And you can bet the local channels WILL fight this. so if right off the bat i get all my local channels (anywhere from 4 to 8 channels depending on market size) and then i add channels, 15-20, PBS has a better shot at being viewed.

SunDeck

12-01-2005, 06:33 PM

There goes the Oxygen Channel.

REDREAD

12-05-2005, 11:09 AM

. But that argument strikes me as decidedly un-American. Why should the Polka Channel be kept on the air by ESPN's coattails.

I'm not saying it's fair, but all the cable companies care about is money. They will rig the "custom packaging" price so that people pay at least as much as they do now.

And a lot of the niche channels will die. I know some people like the Food/cooking channels, but I wonder if those would've even been created if everything was custom. I can see some cable executive deciding that the market wouldn't bear those channels and not even giving them a chance.

Since I only have the 6 free antenna channels, it doesn't matter to me, but I thought I'd point that out.. Coorporations aren't going to intentionlly do something that causes them a net loss in revenue.

westofyou

12-05-2005, 11:11 AM

And a lot of the niche channels will die. I know some people like the Food/cooking channels, but I wonder if those would've even been created if everything was custom.Take a turn around the cooking section at Borders Books.

Currently cooking is a HUGE cultural movement that goes beyond the Food Channel

Cable TV prices are on the rise, but consumers complain there still isn't enough flexibility in the programming packages offered by cable providers.

That could change if the Federal Communications Commission and TV distributors Cablevision and AT&T have their way. Last week, FCC chairman Kevin Martin told a forum sponsored by the U.S. Senate Commerce Committee, which has been examining indecency on radio and television, that consumers could have more choice in what they view for cheaper prices if operators would sell content a la carte.

According to a new report from the FCC that has yet to be made public, a la carte pricing could actually reduce monthly cable bills for many consumers while also providing more control over what channels they watch at home.

News of the FCC report comes just as many large cable operators across the country announced that they are raising rates again for their service. Starting in January 2006, Comcast will bump up the price of its most popular cable package by 6 percent. Time Warner, the nation's second-largest cable operator, plans to raise its rates an average of 3 percent for its expanded package and 2 percent for its limited basic. And Cablevision will raise rates an average of 2 percent.
News.context

What's new:
Arguing that it would reduce subscription costs and give consumers more control over what they watch, the FCC and two cable operators propose offering TV programming a la carte.

What's more, consumers--especially those with children--are becoming increasingly agitated by the amount of violence and sexual content that comes into their homes on channels they'd rather not receive as part of their subscription package.

"At the FCC, we used to receive indecency complaints by the hundreds," said Martin in front of the Senate committee. "Now they come in by the hundreds of thousands. Clearly, consumers--and particularly parents--are concerned and increasingly frustrated."

But content providers and most of the cable industry say that offering programming piecemeal will result in even higher prices and less choice for consumers. They argue that such a pricing structure would infuse enormous technical, marketing and transaction costs into the business. They claim that an a la carte model would require consumers to lease a separate set-top box for each TV.

They also claim that an a la carte pricing model would increase overall subscription rates and reduce diversity of programming, because many of the niche or special-interest channels today are bundled with more popular channels. If these less-popular channels are sold independently, they will become too expensive to offer. And if these channels go away, advertisers have fewer places to show their commercials. The losses in advertising would have to be offset by consumers paying more for their favorite channels.

"We can't comment on any new FCC a la carte report until it's released and we've had a chance to review it," said Kyle McSlarrow, president and CEO of the National Cable & Telecommunications Association (NCTA). "But previous and recent analyses were consistent in their findings that government pay-per-channel regulation would be likely to hurt consumers by increasing prices, decreasing choice and reducing diversity in programming, and it would do so in a way that violates the First Amendment."

The bundle quandary
The way the cable packages are set up today, families who may want basic cable for channels such as Nickelodeon and the Cartoon Network are also forced to subscribe to channels such as MTV or Fox's FX, which often show programs that may be inappropriate for children.

Martin, as well as several consumer groups, say it's time that consumers have more choice in which channels they subscribe to. They believe this will not only help control costs, but it also would allow consumers to subscribe only to content they want to watch.

"People are not satisfied with what cable companies are offering them today," Kenneth DeGraff, a policy advocate at Consumers Union, the publisher of Consumer Reports. "Families are being told they have to subsidize content they find offensive. And the cable companies keep raising rates. They may throw in a few more channels, but no one ever asks consumers which channels they want."

The idea of allowing consumers to pick and choose which channels they want to subscribe to is nothing new. Cablevision, a cable operator in the Northeast, has been advocating the change for years. And just this week, the firm reiterated its support of the a la carte option for customers.

"We do not believe in the long term that selling programming a la carte will be detrimental to either programmers or cable operators," Charles F. Dolan, chairman of Cablevision's board of directors, said in a statement. "On the contrary, our experience indicates a la carte will result in a more affordable service for all with more programming options."

AT&T, formerly SBC Communications, has also thrown its support behind the a la carte option. The company is currently upgrading its broadband network and deploying more fiber optics to be able to offer a paid TV service.

AT&T's network, which will deliver video service via Internet protocol (IPTV), will be well suited to offer a la carte service because its IPTV system is inherently more flexible than the traditional broadcast networks used by cable and satellite TV providers. Traditional broadcast networks transmit programming for all channels at the same time. Viewers watch a particular channel by tuning into that channel.

IPTV networks operate differently. Instead of broadcasting TV shows across the entire network all the time, an IP network can deliver a requested program, or package of programs, to a specific Internet address. These shows could be delivered on demand or as part of a set schedule, but they would be pushed out only to the subscribers requesting them rather than to all subscribers.

AT&T has said it plans to begin offering its TV service in 2005 or early 2006. So far, it hasn't announced details of the service, nor has it announced any deals with programmers. But Dave Pacholczyk, a spokesman for AT&T, said the company is in talks with content providers to offer customers an a la carte option to its TV service.

"As we enter the video market, it is our goal to deliver more choices to our customers when they want it, in the way they want it," he said. "If consumers want a la carte programming, we will be happy to offer it so long as we are able to obtain access to the programming in that manner."
If a channel deserves to exist, people will pay for it, and if it's too expensive, they won't.
--Kenneth DeGraff, policy advocate, Consumers Union

Verizon Communications, which is now offering TV service in two cities, said that it would also offer a la carte programming. But in order for that to happen, the industry must change how it sells and licenses content.

"If the industry wants to go in this direction, we can do it from a technology perspective," said Eric Rabe, a spokesman for Verizon. "But the way the industry is structured today, it requires us to make certain programming available in tiers. That's the way the content is sold to us."

And here is where the problem seems to lie. Content providers like ESPN, which is owned by the Walt Disney Company, say that a la carte pricing ultimately costs consumers more because it reduces the reach of certain channels, which decreases advertising revenue. It also increases marketing costs, which result in higher prices that have to be passed on to consumers. Even though the FCC's report supposedly refutes these concerns, ESPN and the NCTA stand behind their claims.

"We haven't seen the report to comment specifically," said an ESPN spokesman. "But we don't support the premise."

ESPN is a good example of how bundled programming works. Its main channel is one of the most popular in most basic cable packages, and one of the most expensive. To help justify the price it often throws a few less-popular channels, such as ESPN2, into the bundle. If Disney sold each of its channels separately, it would likely sell more subscriptions to the flagship ESPN channel and fewer subscriptions to the lesser known channels. With fewer viewers, advertising revenue on those less-popular channels would likely go down as well. As a result, ESPN would have to charge more for the more-popular channel to offset losses on the less-popular channels.

But consumer advocates say that a free market will eventually work in consumers' favor. Not only will prices be forced to fall to attract viewers, but programming will likely get better because content providers will compete more aggressively for viewers.
In other news:

"When cable providers add more channels, it doesn't change how much TV people watch," said Consumers Union advocate DeGraff. "No one watches a lot of those extra channels. They just go into the ether. If a channel deserves to exist, people will pay for it, and if it's too expensive, they won't."

DeGraff added that he isn't advocating that cable companies and content providers get rid of bundles entirely.

"Bundles aren't bad," he said. "But they only work when people can opt out of the bundle. We just think consumers should have more choices."